Financial Report Analysis of ANTA Sports' 2023 Annual Performance: Revenue Growth Rebounds, Profitability Improves Significantly

In late March, ANTA Sports released its full-year performance report for 2023. The company achieved a total revenue of 62.356 billion yuan (RMB, same below), a year-on-year increase of 16.23%. $ANTA SPORTS(02020.HK) $Dow Jones Industrial Average(.DJI.US) $Direxion S&P 500 Bull 3X(SPXL.US) $NASDAQ Composite Index(.IXIC.US) $Hang Seng Index(00HSI.HK) $Nike(NKE.US) $LI NING(02331.HK)

1. Summary of Personal Views

1. Over the past year, ANTA Sports delivered solid performance, with revenue growth rebounding significantly compared to the previous year, and profitability improving substantially.

2. From an operational perspective, ANTA's key brands performed well, especially FILA, which reversed its declining revenue growth from the previous year, contributing to overall revenue improvement. The rise in gross margin and effective cost control further enhanced profitability.

3. The sports apparel sector as a whole performed modestly last year, but as a leading company, ANTA's financial results and stock performance were among the best. The recent rebound in its stock price is worth close attention.

Overall, ANTA Sports demonstrated strong performance in the past year, driven by its core brands, particularly FILA's successful turnaround in growth. Improved gross margins and cost control significantly boosted profitability. Despite the sector's lukewarm performance, ANTA, as the industry leader, outperformed peers in both financials and stock performance, with its recent rebound highlighting investment potential.

2. Financial Analysis: Revenue Growth Rebounds, Profitability Improves Significantly

In terms of revenue, ANTA Sports achieved 62.356 billion yuan for the full year, up 16.23% YoY. Notably, the FILA brand, which saw negative growth in 2022, contributed significantly to revenue growth, outpacing the ANTA main brand.

In profitability, ANTA's net profit attributable to shareholders reached 10.2 billion yuan in 2023, surging 34.9% YoY. This sharp increase reflects improved operational efficiency and profitability, driven by higher gross margins and cost optimization.

3. Operational Insights: Cost Efficiency Boosts Profitability, Mature Brand Portfolio, Revenue Surpasses Nike Greater China

1. Cost Efficiency Improves Profitability

ANTA achieved notable results in finance and operations. Its gross margin rose 2.4 percentage points YoY to 62.6%, thanks to the DTC model and improved discounts. DTC allowed ANTA to better control pricing and sales channels, enhancing profitability. Inventory turnover days also dropped by 15 days (nearly 11% YoY), reflecting efficient inventory management.

R&D spending exceeded 1.6 billion yuan, surpassing the combined total of other listed Chinese sports apparel companies. While R&D increased short-term costs, it is key to long-term competitiveness. Despite a 10.4% YoY rise in sales and administrative expenses, ANTA optimized store layouts, e-commerce marketing, and overall efficiency, leading to a 36.8% YoY increase in operating profit to 15.367 billion yuan.

2. Mature Brand Portfolio

The ANTA main brand shone with revenue up 9.3% YoY to 30.306 billion yuan, becoming the first domestic brand to break the 30-billion-yuan mark. Operating margin rose 0.8 percentage points to 22.2%, showcasing steady profitability.

FILA also delivered strong growth, with revenue up 16.6% YoY to 25.103 billion yuan and operating margin surging 7.6 percentage points to 27.6%, highlighting its success in the premium fashion sports segment.

Other brands under ANTA grew revenue by 57.7% YoY to 6.947 billion yuan, far outpacing the industry. Operating margin rose 6.5 percentage points to 27.1%, demonstrating the success of its multi-brand strategy.

3. Comparison with Global Leader Nike

ANTA and Nike, two giants in sports apparel, have drawn much attention. While Nike remains the global leader, its 2023 net profit declined, lagging behind ANTA's performance.

In market strategy, ANTA's deep local insights and multi-brand approach, coupled with e-commerce expansion, drove rapid growth. Nike maintained stable global market share but saw slower growth in Greater China, where ANTA surpassed its revenue in 2022.

As consumer demands evolve, both companies must innovate to stay ahead. Personally, I lean toward supporting domestic brands.

This article reflects my personal analysis of the quarterly report, based on my own research. Feedback is welcome. Note that this does not constitute investment advice; readers should conduct independent analysis.